Foodstuffs co-ops say food supply remains stable despite Iran conflict

• Global uncertainty is putting fuel and freight costs back in focus
• Business as usual at Foodstuffs stores; supplier partners planning ahead
• Stats NZ records 4.5% annual food price inflation (FPI) in February, but a fall of 0.1% between January and February
• The Foodstuffs co-ops’ stores see retail prices rise 3.7% YOY for their comparable FPI basket of products as they continue working to keep costs down
• Red meat, select fruit and veges lead price increases; impact of the Iran war not yet seen in February results.

The Foodstuffs grocery co-ops say they’re watching developments in the Middle East closely, but food supply remains stable and supermarket shelves are well stocked.

While the data released today relates to the period before the conflict, Foodstuffs NZ Managing Director, Chris Quin says the co-ops are working with suppliers and freight partners to ensure disruption to food supply is minimised.

“New Zealand sits at the end of global supply chains, so we’re always looking upstream and keeping an eye on international events that could have flow-on effects for us,” says Quin.

“A large proportion of our products are grown or manufactured locally in New Zealand or Australia, sourced from Asia, or travel from Europe around the Cape of Good Hope at the bottom of Africa. So, right now our grocery supplies are largely unaffected by the disruption in the Strait of Hormuz, and our normal offer’s available in our stores. 

“The main issue at the moment is higher fuel, freight and packaging costs rather than product availability,” says Quin. “We’ve seen the cost of diesel for our transport fleet rise significantly, but at this stage we’re absorbing that to help keep our food prices as steady as possible for customers.

“For every dollar on-shelf, around two-thirds goes to suppliers for the goods themselves,” says Quin. “So if suppliers are facing higher freight, fuel, packaging or other input costs, those pressures flow through over time.

“As we’ve all seen, this is a fast-moving situation, with no clear timeframes or outcomes. The effects of what’s happening now with supply chains and fuel prices could still be felt months down the track.

“We’re working closely with our supplier partners, who are busy planning ahead. In some cases, that may mean carrying a little more stock, ordering earlier, or sourcing from a broader mix of regions to help keep product moving for customers.

“Our focus remains the same – offering customers high-quality products, good choice and the best value we can. That’s what our co-ops are built to do, through local family-owned stores that know their communities and work hard every day to deliver for New Zealanders.”

Stats NZ today reported an annual food price inflation (FPI) rate of 4.5% for February, while Foodstuffs Stores recorded an average year-on-year retail price increase of 3.7% across its comparable FPI basket.

Some of the co-ops’ biggest year-on-year price drops in February included olive oil (down 19.0%), kumara (-17.5%), carrots (-9.8%), along with several other grocery items, such as canned tuna (-10.8%), chicken nuggets (-10.7%), and tomato sauce (-7.5%).

Meanwhile, some of the steepest year-on-year price increases last month were cucumbers (up 75.5%), courgettes (+70.0%), tomatoes (+54.0%), and mandarins (+28.9%).

“Fresh produce prices can move around quickly when weather conditions change,” says Quin. “A cold snap through the middle of February, along with lower sunshine hours, slowed growth in some fruit and vege lines, like cucumbers and courgettes, pushing up prices.”

Looking ahead, Quin says favourites such as feijoas are coming into season, while ruby red kiwifruit are already in store, with green and gold varieties on the way. Pumpkins – including crown, butternut and buttercup – are also offering better value as the season progresses.

Strong global demand and tight supply for red meat are keeping prices elevated, with some of the biggest annual increases seen in sirloin steak (up 22.9%), blade steak (+22.6), lamb chops (+20.4%), and beef mince (+19.3%).

“Chicken and pork continue to offer customers more affordable protein options, and they’re popular alternatives at the moment,” says Quin.

In February, Foodstuffs’ retail price increases were outpaced by supplier costs, up an average 5.4% year on year for products in the co-ops’ FPI basket. The Infometrics Grocery Supplier Cost Index (GSCI), which tracks more than 60,000 goods stocked across the co-ops’ 500+ stores, was steady on 2.3% pa – in line with January.